Kaushi—who, I noticed, never called me sir—wasn’t shy at all about his enthusiasm for workers’ revolution, and asked me if I wanted one.
“I’m definitely thinking about it.” And that was how my article ended, which may or may not have influenced GQ’s editors to kill the piece and neglect to solicit future contributions from me.
Most of my youth went by during the end of history, which has itself now come to an end. If no serious alternative to liberal capitalism can yet be made out, surely it’s also become difficult for anyone paying attention to view the present system as viable. The more substantial book I intend to be my next will sketch a different possible order. The aim is not unique; several important postcapitalist visions marked by what might be called a tough-minded utopianism (notably, in the US, After Capitalism by David Schweickart, and What Then Must We Do?

…

It was in the light of the feeling of a windless postmodern stasis that Jameson wanted to stick up for utopianism, especially in Archaeologies of the Future (2005), his appreciation of utopia as a subgenre of science fiction and an immortal human desire: “The very political weakness of utopia in previous generations—namely that it furnished nothing like an account of agency, nor did it have a coherent historical and practical-political picture of transition—now becomes a strength in a situation in which neither of these problems seems currently to offer candidates for a solution.” The dialectic, Adorno said, would renounce itself if it renounced the “idea of potentiality,” and it was just this dimension that Jameson meant to preserve amid the deadly consensus as to the unsurpassable virtues of liberal capitalism.
In “The Valences of History,” the concluding essay of the new book, Jameson argues that when the fitful apprehension of history does enter the lives of individuals it is often through the feeling of belonging to a particular generation: “The experience of generationality is … a specific collective experience of the present: it marks the enlargement of my existential present into a collective and historical one.”

…

Otherwise, only a description of capitalism can be offered, and some suggestions for reform, but no fundamental criticism.
Since the 1970s—and especially since 1991—perhaps the greatest challenge for Marxism has been to keep alive the belief in the possibility of a superior future society. The belief was trampled almost to extinction by miscarried Third World revolutions, capitalist transformation in China, the capitulations of European socialist parties, Soviet collapse, and the ostensible triumph of liberal capitalism. The skepticism that replaced it was twofold. The would-be revolutionary left seemed to possess neither a serious strategy for the conquest of power nor a program to implement should power be won. In this context, the maximalism of the left at its high-water marks could only ebb into a kind of survivalist minimalism. The pith of minimalism lay in the alter-globalization slogan: “Another world is possible.”

The fact that capitalism has, until now, managed to outlive all predictions of its impending death, need not mean that it will forever be able to do so; there is no inductive proof here, and we cannot rule out the possibility that, next time, whatever cavalry capitalism may require for its rescue may fail to show up.
A short recapitulation of the history of modern capitalism serves to illustrate this point.10 Liberal capitalism in the nineteenth century was confronted by a revolutionary labour movement that needed to be politically tamed by a complex combination of repression and co-optation, including democratic power sharing and social reform. In the early twentieth century, capitalism was commandeered to serve national interests in international wars, thereby converting it into a public utility under the planning regimes of a new war economy, as private property and the invisible hand of the market seemed insufficient for the provision of the collective capacities countries needed to prevail in international hostilities.

…

In the early twentieth century, capitalism was commandeered to serve national interests in international wars, thereby converting it into a public utility under the planning regimes of a new war economy, as private property and the invisible hand of the market seemed insufficient for the provision of the collective capacities countries needed to prevail in international hostilities. After the First World War, restoration of a liberal-capitalist economy failed to produce a viable social order and had to give way in large parts of the industrial world to either Communism or Fascism, while in the core countries of what was to become ‘the West’ liberal capitalism was gradually succeeded, in the aftermath of the Great Depression, by Keynesian, state-administered capitalism. Out of this grew the democratic welfare-state capitalism of the three post-war decades, with hindsight the only period in which economic growth and social and political stability, achieved through democracy, coexisted under capitalism, at least in the OECD world where capitalism came to be awarded the epithet, ‘advanced’.

…

The most important liaison between the two was, of course, Friedrich von Hayek, who for a few years occupied a chair at Freiburg, the academic home of the German ordoliberal school.9 Michel Foucault’s analysis of the rise of neoliberalism rightly focuses on Germany rather than Anglo-America.10 In anchoring ordoliberalism in the German state tradition and the politics of post-war and post-Nazi Germany, Foucault might have gone back further to Schmitt and Heller, where he would have found the basic figure of thought that informed and informs liberal ideas of the economic role of state authority under capitalism – the idea, in the words of the title of a 1980s book on Margaret Thatcher, of the need of a ‘free economy’ for a ‘strong state’.11
The unique qualification of ordoliberalism for building a bridge from the authoritarian liberalism of interwar Germany, as conceived by Schmitt and analysed by Heller, to the neoliberalism that began to dismantle the post-war political economy in the 1980s can be seen when comparing it to the economic common sense of the 1950s and 1960s. The Frankfurt School of ‘Critical Theory’, for example, was convinced that the capitalist economy had become inseparably merged into the state, which in the process had turned into the dominant institutional complex in contemporary society.12 After ‘the end of laissez-faire’, the place of liberal capitalism was supposed to have been taken by three competing economic systems, communism, fascism and New Deal democracy. All of them were seen as deeply politicized, democratically or not, with markets having given way to large, bureaucratically organized corporate monopolies closely affiliated with the bureaucracies of the state. In its own way, each of the three systems resembled Schmitt’s total state, with the New Deal variant carrying the risk of a democratic subversion of market justice, under the influence of pluralist democracy.

Even at the beginning of US involvement in World War Two, as Roosevelt began his epic wheeling-dealing to pry the economic assets of the British Empire from Churchill, US geopolitical goals continued to be framed within a basically sphere-of-interest concept that took the division of the world market for granted. Thus the Council on Foreign Relations commissioned research to determine the minimal size of the informal empire necessary for the survival of US private capitalism in terms of raw material supplies, domestic employment and export outlets. This informal empire, called the ‘Grand Area’, was accepted as the sphere-of-interest reserved for liberal capitalism in the event of necessary accommodation with German and Soviet power. The Grand Area was envisioned as including the Western Hemisphere, the British Isles, the Commonwealth and Empire, the Dutch East Indies, China and Japan.52 (As we shall see, this concept dovetailed neatly with the ‘Atlantic Union’ idea propagated in the same period by Clarence Streit on behalf of the British imperialists organized in the Round Table Society.)

…

‘These liberals will rapidly accept the leadership of the President if he undertakes a liberal diplomatic offensive, because they will find in that offensive an invaluable support for their internal domestic troubles’.18 Hitherto, the European liberal bourgeoisie had been able both to contain domestic working-class pressures and to maintain a degree of autonomy vis-à-vis the United States,19 but the Russian Revolution threw them into the arms of Wilson and the universalist policy he had been cultivating for several years.
The Crusade for Democracy
The revolution would not have been confined to Russia had it not been for the entry of the United States in the crucial final stage of the war and the tremendous power thus thrown into battle on the side of liberal capitalism by the internationalist fraction of the American bourgeoisie led by Wilson. By his handling of the crisis of European imperialism and the revolutionary challenge that arose from it, Wilson set a historical example of how to bring unity of purpose to the liberal capitalist world and isolate its opponents.
The World War had been largely ignited by rivalries arising from intersecting circuits of money capital and related railway and armaments programmes in Eastern Europe.

…

In present-day France, the fate of the Left government launched on the basis of an (emaciated) programme of nationalizations illustrates better than anything the fundamental dislocation of state monopolism by a new liberalism, and hence, represents a critical moment in the crisis of the theory of state-monopoly capitalism, its reformist assumptions, and the Communist parties clinging to its tenets.
The crystallization of a state-monopoly tendency in the Atlantic bourgeoisie during the interwar years arose from the survival needs of large-scale industry confronted with the havoc wrought by an anarchic liberal capitalism, whose operating principles were no longer adequate to the development of the productive forces.
After the Armistice in 1918, state intervention had been dismantled along with the apparatuses of the war economies as such. The defeat of the working class and the confinement of its revolution to Soviet Russia allowed the bourgeoisie to opt for a rehabilitation of pre-war patterns of class and economic relations, and to retreat from the danger-zone of state control.

This is not contradicted by the fact that Adorno introduced ‘late capitalism’ into social theory as a ‘Frankfurt School’ concept, using it in the title he chose for the German Sociological Congress in 1968 and in his opening report ‘Late Capitalism or Industrial Society?’ (T. Adorno, ‘Late Capitalism or Industrial Society?’, in Volker Merja et al., Modern German Sociology, New York: Columbia University Press, 1987). Adorno distinguished ‘late capitalism’ from what he called ‘liberal capitalism’, which, following Pollock, he regarded as a historically prior form of capitalism now superseded by state intervention and organization. Late capitalism was thus essentially identical with what others had been calling ‘organized capitalism’. The possibility of a looming crisis of organized (late) capitalism, or of a return to its liberal past in the shape of a neoliberal future, does not appear anywhere in Adorno’s writings.
23 D.

…

Canedo, The Rise of the Deregulation Movement in Modern America, 1957–1980, New York: Columbia University, 2008.
50 In different perspectives and from different normative positions, Weber, Schumpeter and Keynes all predicted a peaceful, or not so peaceful, end to free-market capitalism in the second half of the twentieth century. It is also worth recalling that, in The Great Transformation (1944), Karl Polanyi took it for granted that liberal capitalism was history and would not return. ‘Within the nations we are witnessing a development under which the economic system ceases to lay down the law to society and the primacy of society over that system is ensured’ (K. Polanyi, The Great Transformation: The Political and Economic Origins of Our Time, Boston: Beacon Press, p. 251).
51 For a selection from the abundant literature on the subject, see H.

A standing critique is that these changes were superficial: they were more a matter of updating their rhetoric, without necessarily becoming any less distant from grassroots struggles and frontline communities.
One side of the limitations of the dominant ENGO approach is the failure of mainstream environmentalism to challenge neo-liberal capitalism. Neo-liberalism is a type of capitalism with extensive government support, in the form of deregulation, privatization, and reducing government intervention, while expanding the role of markets in economic life. The logic of neo-liberalism holds that the free market will respond to the environmental and social needs of the public by creating new technologies or services. Both Rodriguez and McMichael contend that what they describe as the “NGO industrial complex” reinforces neo-liberal capitalism, as ENGOs fill a market role of assuaging public guilt for social or environmental destruction without challenging the root issue of capitalism.9 Simply put, many ENGOs profit from selling stories of environmental destruction and token reforms to the public.

…

I argue that this approach, which is best understood as a form of reactionary environmentalism, is designed to reassure investors, neutralize criticism, and placate both apathetic and concerned citizens. Its Achilles heel, however, lies in claims to be engaging in a rational conversation, despite lacking evidence, in order to defend the unsustainable proposition of endless growth.
Reactionary Environmentalism in the Tar Sands
Reactionary environmentalism is, in essence, an extreme right-wing philosophy tied to the political economic ideology of neo-liberal capitalism. It goes under various guises, such as “ecological modernization,” “market ecology,” and “green neo-liberalism,” with the fundamental premise being a “business-as-usual” approach to environmental problems that largely places the onus on technological innovation and corporate self-management.4 In this messianic vision of enlightened corporations operating benignly within ever-freer markets, the best thing for the environment—it is claimed—is to turn everything into a commodity, from the water we drink to the air we breathe, as this supposedly yields uncoerced behavioural reform and promotes investment in innovation and efficiency.

…

The trope of “ethical oil” rests in large measure on Alberta’s place in an affluent, Western, democratic, capitalist nation, which ensures that transnational corporations (including many of the same players who have been implicated in crimes elsewhere) are welcome to purchase their extraction “rights” and can be entrusted to be responsible, law-abiding corporate citizens. Former premier Ralph Klein helped convert Alberta into a “capitalist paradise,”18 and this political and regulatory environment of neo-liberal capitalism is the crux of Levant’s claim that “the oil sands are cleaner than any other competing jurisdiction.”19 After all, the companies are just doing what they are allowed to do by law!
Levant attempts to build his case further through a hodgepodge of relativist claims, and some patently absurd ones. For instance, at one point he goes so far as to liken the extraction of bitumen to “the largest cleanup of an oil spill in the history of the world.”20 He also casts doubt on the science of climate change as a mere “theory,” while celebrating the industry’s tremendous efforts to reduce the intensity of pollution per barrel produced and its impacts on water, wildlife, and downstream communities—all the while heaping scorn upon dirty industries abroad.

In Ireland “a similar outcome occurred during the 1987–1989 stabilization.”113 Why, then, do these cases “so sharply contradict the Keynesian prediction about the effects of a fiscal contraction?”114 Giavazzi and Pagano conjectured that “in both cases, cuts in spending and tax increases were accompanied by a shift in the balance of political power, and by complementary monetary and exchange rate policies; after an initial devaluation, both countries pegged … to the German mark, inducing a sharp monetary deflation, and liberalized capital flows.”115
This did not, however, sound very expectations related. New policies and developments external to the budget brought about a major fall in interest rates that increased income (a wealth effect—less debt to pay back) more than the contraction in spending hurt the economy. To get over this problem, Giavazzi and Pagano teased out econometrically the part of the postcontraction boom that can’t be attributed to the wealth effect.

…

The classic exposition of this thesis remains Barrington Moore’s Social Origins of Dictatorship and Democracy (Boston: Beacon Press, 1966) and Alexander Gerschenkron, Economic Backwardness in Historical Perspective (Cambridge, MA: Harvard Belknap Press, 1962).
6. Woo Cummings, ed., The Developmental State (Ithaca, NY: Cornell University Press 1999); but also Wolfgang Streek and Yamamura, The Origins of Non-Liberal Capitalism (Cambridge: Cambridge University Press 2002).
7. Gerschenkron, Economic Backwardness; and Leonard Seabrooke, The Social Sources of Financial Power (Ithaca, NY: Cornell University Press, 2006).
8. The world’s first welfare state was founded in Germany, in the nineteenth century, by Otto von Bismark.
9. David J. Gerber, “Constitutionalizing the Economy: German Neoliberalism, Competition Law and the ‘New’ Europe.”

No established communist system had ever been dismantled or overthrown from within. People expected this contest between rival systems to continue indefinitely. Instead, they saw it coming to a quick, decisive and non-violent end. As communism rolled out of Eastern Europe in 1989, an American philosopher forecast that the end of history was approaching13 and that every other political system in the world would evolve into the western model of liberal capitalism.
These developments were mirrored in domestic politics. Since 1945, the UK had edged towards becoming more ‘socialist’, with free medicine, free schools, state pensions and more than 40 per cent of the country’s industrial capacity owned by the state. Within the Labour Party, there was a vigorous movement led by Tony Benn to give the country another sharp push in the same direction. Mrs Thatcher, however, was determined to ‘roll back the frontiers of socialism’,14 which she succeeded in doing.

…

Aft er the great upheavals of the 1980s, there were no more big political causes to be fought. ‘Nowadays, there is a clear tendency to proclaim the death of all ideologies in the name of the victory of capitalism,’ the novelist Carlos Fuentes lamented, writing in the Guardian in the last week of 1990.16
However, to proclaim that history has ended, that all ideologies have been routed by the final victory of liberal capitalism is itself ideological. It was to be the prevailing ideology of the 1990s. British history did not end during the 1980s, but it did slow down, because the events of that turbulent decade had settled the way that Britons would be ruled and the way they thought about the world for at least the next quarter of a century.
NOTES
INTRODUCTION
1. According to Frank Field, Labour MP for Birkenhead, a visitor to a Merseyside Jobcentre would see ‘jobs advertised at £1.20 an hour, £1 an hour, £57.25 a week’, while the best paid ones would offer ‘princely sums of £70 and £91 a week’.

The object of social institutions is to ‘faire concourir les principales institutions à l’accroissement du bien-
être des prolétaires’, defined simply as ‘la classe la plus nombreuse’ ( Organisation Sociale, 1825). On the other hand, insofar as the ‘industrialists’ are entrepreneurs and technocratic 28
Marx, Engels and pre-Marxian Socialism
planners, they oppose not only the idle and parasitic ruling classes, but also the anarchy of bourgeois-liberal capitalism, of which he provides an early critique. Implicit in him is the recognition that industrialisation is fundamentally incompatible with an unplanned society.
The emergence of the ‘industrial class’ is the result of history.
How much of Saint-Simon’s views were his own, how much influenced by his secretary (1814–17), the historian Augustin Thierry, need not concern us. At all events social systems are determined by the mode of organisation of property, historic evolution rests on the development of the productive system, and the power of the bourgeoisie on its possession of the means of production.

…

Nevertheless, the fall of the USSR and the Soviet model was traumatic not only for communists but for socialists everywhere, if only because, with all its patent defects, it had been the only attempt actually to construct a socialist society. It had also produced a superpower which for almost half a century acted as a global counterbalance to the capitalism of the old capitalist countries. In both these respects its failure, not to mention its patent inferiority in most respects to Western liberal capitalism, was manifest, even to those who did not share the post-1989 triumphalism of Washington ideologists. Capitalism had lost its memento mori. Socialists saw that the end of the Soviet Union 386
Marxism in Recession 1983–2000
foreclosed any hope that somehow a different and better socialism (‘with a human face’ as the Prague Spring put it) could emerge from the heritage of the October Revolution.

The powerful stand above treaties and laws.
Constraints on capital flow are barred: for example, the conditions imposed by Chile to discourage inflows of short-term capital, widely credited with having insulated Chile somewhat from the destructive impact of highly volatile financial markets subject to unpredictable herdlike irrationality. Or more far-reaching measures that might well reverse the deleterious consequences of liberalizing capital flows. Serious proposals to achieve these ends have been on the table for years, but have never reached the agenda of the “architects of power.” It may well be that the economy is harmed by financial liberalization, as the evidence suggests. But that is a matter of little moment in comparison with the advantages conferred by the liberalization of financial flows for a quarter century, initiated by the governments of the United States and UK, primarily.

The first great blow was in Russia, where Vladimir Putin replaced Boris Yeltsin as president and set about closing down the system of free and fair elections while retaining its trappings. The West is good at screening out local detail when it is inconvenient, particularly in regard to Russia. In the 1980s, the Soviet Union’s collapse humiliated an entire generation of Western Sovietologists. None had been expecting it. In the 1990s, we convinced ourselves Russia was in transition from socialist autocracy to liberal capit­alism, even while Western consultants urged Moscow to adopt shock therapy, which would enable the rise of a new Russian oligarchy. On Western advice, Yeltsin privatised Russia’s most valuable state assets in a fire sale to a small coterie of businessmen in exchange for bankrolling his 1996 re-election. Still our faith was unshaken. In 2008, we believed Putin’s authoritarian interregnum had ended and that Russia had resumed its journey to sunlit uplands under Dimitry Medvedev.

Adam Hochschild, Bury the Chains: Prophets and Rebels in the Fight to Free an Empire’s Slaves
(Boston: Houghton Mifflin, 2005), 197.
99
100
Ellen Gruber Garvey
7. See Augusta Rohrbach, “‘Truth Stronger and Stranger than Fiction’: Reexamining William
Lloyd Garrison’s The Liberator,” Truth Stranger Than Fiction: Race, Realism, and the U.S. Literary Marketplace (New York: Palgrave, 2002), 2, for an examination of the relationship of The Liberator to
“liberal capitalism and moral suasion.”
8. Dan McKanan, Identifying the Image of God: Radical Christians and Nonviolent Power in the Antebellum United States (New York: Oxford University Press, 2007), 135.
9. Although writers like Spender have criticized Theodore Weld for failing to share authorial
credit for American Slavery with his wife and sister-in-law, and he did sign the circular requesting
information, his name does not actually appear on the 1839 edition as the book’s author.

The neoliberal subject is not supposed to be “free” to meditate upon the nature and limits of her own freedom—that is the dreaded “relativism” which neoliberals uniformly denounce.
95 Behrent, “Liberalism Without Humanism.” This is discussed in the next chapter, in the section on governmentality.
96 See Kristol, “Socialism, Capitalism, Nihilism,” LAMP, Montreux meeting, 1972: “And what if the ‘self’ that is ‘realized’ under the conditions of liberal capitalism is a self that despises liberal capitalism, and uses its liberty to subvert and abolish a free society? To this question, Hayek—like Friedman—has no answer.”
97 There are exceptions to this generalization. For instance, the MPS member Gary Becker has proposed to solve illegal immigration by “selling” the rights to citizenship. This reduces state services to the ultimate commodity. It is significant that few other neoliberals have endorsed this complete dissolution of nationalist identity, although one could argue it follows logically from the other tenets of the program.

Those with privilege will no doubt struggle to maintain it, while the poor, driven to desperation by generally worsening economic conditions, may in increasing numbers of instances organize or even revolt in order to increase their share of a shrinking pie.
In her 2008 book The Shock Doctrine: The Rise of Disaster Capitalism, Canadian anti-globalization author and activist Naomi Klein argued that modern neo-liberal capitalism thrives on disasters, in that politicians and corporate leaders take advantage of natural calamities and wars to ram though programs for privatization, free trade, and slashed social spending — programs that are inherently unpopular and would have little chance of adoption in ordinary times.51 Klein’s thesis seems confirmed in the present instance: the end of growth is presenting societies with an ongoing economic crisis, and we have already seen how, in the US, well-heeled investors and executives have benefited from government bailouts while millions of workers have lost jobs and homes.

Pretty much
everything described as Costa Rican folklore is in fact from
Guanacaste—including the country’s national dance, the
‘Punto Guanacasteco’ (allegedly invented by a bored musician
jailed for drunkenness), national tree and national costume.
Guanacaste is the only part of the country where colonial
architecture can still be seen intact and traditional ox carts
are in use.
In fact, however, Guanacaste only became part of Costa
Rica in 1824. Previously the southernmost province of
Nicaragua, its inhabitants narrowly voted to leave that
country because of the ongoing civil war between the liberal
capital, León, and the powerful conservative trading town
of Granada following independence from Spain in 1821.
Nicaragua did not accept the loss of Guanacaste until 1858,
when a border limit treaty was ﬁnally signed.
The people of Guanacaste (known by the Meseta Central
Ticos as cholos) clearly have a richer ethnic mix than most
other areas of the country. Their Chorotega Indian heritage is
very evident, as is the black blood from African and mulatto
slaves brought with the original Spanish settlers.

In October 1941, its members blew up seven synagogues.
According to Jacques Marseille in his history of L’Oréal, Eugène Schueller was familiar with a number of ‘Cagoulards’. Following the fall of France in 1940, he helped to finance Deloncle’s next group, Le Mouvement Social-Révolutionnaire (The Social Revolutionary Movement), whose aim was to ‘construct a new Europe with the cooperation of Germany and all other nations free, like her, of liberal capitalism, Judaism, Bolshevism and Freemasonry’. This time Schueller’s name appeared for all to see on the group’s posters and political tracts – alongside that of Jacques Corrèze, Deloncle’s secretary, who would later become chairman of L’Oréal’s American operations (‘Jacques Corrèze, L’Oréal official and Nazi collaborator, dies at 79’, New York Times, 28 June 1991).
After the war, Schueller was called before a committee set up to identify collaborators.

These arguments have been widely deployed in support of free capital flows. When Stanley Fischer made the case for capital mobility during the 1997 meetings of the IMF, he devoted a major part of his presentation to the adjustments required for countries to “prepare well” for capital mobility. As he put it, “economic policies and institutions, particularly the financial system, need to be adapted to operate in a world of liberalized capital markets.” Some of what needs to be done was well known, he said. Macroeconomic policies need to be “sound” the domestic financial system needs to be “strengthened” and the removal of capital controls should be phased in “appropriately.” But there were also issues about which there was less knowledge or consensus. How much information about their conduct of policy should central banks and other government authorities share with financial markets?

Perhaps the most prominent British businessman of the time was Sir Alfred Mond, son of the founder of the chemical company Brunner Mond, which was at the core of the group of companies that came to be known as Imperial Chemical Industries (ICI). In his book After the Victorians, the novelist, biographer and journalist A. N. Wilson points out that when Mond was raised to the peerage with the title of Lord Melchett, he felt obliged to counter a denunciation of capitalism made by Philip Snowden in the House of Commons.223 In a classic defence of liberal capitalism, he talked of his father’s risk taking and altruism, of the dangers they had endured to build up a huge business and of the benefits to society that resulted. Father, son and various business partners had, he said, given work and prosperity to thousands, an enterprise which ‘could never have been commended under any Socialist system that I have ever known’.
Mond believed that laissez-faire was no longer the way to produce general prosperity and strongly opposed confrontational industrial relations.

As that consensus began to unravel in the 1970s with the failure of the Bretton Woods system of fixed but adjustable exchange rates, countries slowly moved away from capital controls to the world we’re now living in. In a world of constant financial innovation, it became increasingly difficult to impose capital controls successfully. Moreover, capital controls allowed countries to pursue bad domestic policies for too long, ultimately to their own detriment.
Nevertheless, the abolition of capital controls has hardly been plain sailing. Some economists foresaw the problems associated with newly liberalized capital markets. James Tobin (1918–2002), for example, suggested in 1972 a (now-eponymous) tax – to be paid on foreign-exchange transactions – to limit speculative cross-border capital flows. He feared that the failures of Bretton Woods would be replaced by anarchy in the capital markets. On occasion, he was proved right.
Enthusiasm for some kind of capital control has recently returned (as I wrote this book, capital controls were making a comeback: Brazil and Taiwan, for example, introduced capital controls in November 2009).

But this harking back to a critique of an old aristocratic culture is unhelpful. Elite educational institutions succeed not because they are in the pocket of the former aristocratic elite (though, of course, old habits die hard and it is still possible to find traces of this), but because they are at the apex of highly competitive recruitment and training processes which lie at the heart of contemporary neo-liberal capitalism. Meritocracy goes hand-in-hand with the generation of the kind of intense inequalities we have identified in this book. It thus follows that calls for more ‘education’ as a means of encouraging social mobility and addressing class inequalities have considerable limitations in the face of the growing inequalities witnessed in recent decades.
The new class politics of classification
We should once again take up a politics of equality.

Politicians can create the appearance of rising wages by accelerating
inflation, which is precisely what Swedish politicians did for
68
a long time. Because each dollar is then worth less, however, those
increases are entirely chimerical. Growth and productivity alone
are capable of raising real wages in the long run.
All political and economic systems need rules, and this includes
even the most liberal capitalism, which presupposes rules about
legitimate ownership, the writing of contracts, the resolution of
disputes, and many other matters. Those rules are a necessary
framework required for markets to operate smoothly. But there
are also rules that prevent the market economy from working—
detailed regulations specifying the uses people can make of their
property and making it difficult to start up a certain kind of
activity, owing to the need for licenses and permits or to restrictive
rules on pricing and business transactions.

There is constant pressure on older firms — and given the weakened state of large parts of the mainframe computer business, "older" can be defined pretty liberally — coming both from demanding rentiers and product market competition. Given the ownership and management structure of U.S. industry, there's a conflict among stockholders, managers, and workers over how to manage these strains. Wall Street would like to withdraw capital from these industries — slim them down or eliminate them entirely — and pocket the money. In high market theory, Wall Street can be relied upon to redeploy this liberated capital beneficently, and the squeezed industries will either discover a fountain of youth under the discipline of debt or die. Since the last 200 pages of this book have argued that Wall Street isn't up to that task, the whole finance and governance structure is called into serious question.
The great advantage of Jensenism is that, when combined with an uncritical acceptance of the efficient market religion, it amounts to a unified field theory of economic regulation: all-knowing financial markets will guide real investment decisions towards their optimum, and with the proper
GOVERNANCE
set of incentives, owner-managers will follow this guidance without reservation.

By 1990 the average American was seventy-three times richer than the average Chinese.17
Moreover, it became clear in the second half of the twentieth century that the only way to close that yawning gap in income was for Eastern societies to follow Japan’s example in adopting some (though not all) of the West’s institutions and modes of operation. As a result, Western civilization became a kind of template for the way the rest of the world aspired to organize itself. Prior to 1945, of course, there was a variety of developmental models – or operating systems, to draw a metaphor from computing – that could be adopted by non-Western societies. But the most attractive were all of European origin: liberal capitalism, national socialism, Soviet communism. The Second World War killed the second in Europe, though it lived on under assumed names in many developing countries. The collapse of the Soviet empire between 1989 and 1991 killed the third.
To be sure, there has been much talk in the wake of the global financial crisis about alternative Asian economic models. But not even the most ardent cultural relativist is recommending a return to the institutions of the Ming dynasty or the Mughals.

INCREASING AND VARYING CORRELATIONS
Concern
The key benefit from international investing arises because of low
correlations between the domestic market and foreign markets.
There are two criticisms of historical correlations. First, the correlations may be increasing due to greater global integration as evidenced by larger capital and trade flows. Moreover, as more and
more emerging markets liberalize capital flows, the correlations will
increase. If the correlations are increasing, the above analysis based
on prior data overestimates the benefit from international investing. Reconsider the example in the preamble of “Evidence,” above.
With a correlation of 0.60, the new portfolio’s risk fell from 18 percent to 16 percent. However, if the correlation is 0.70 instead of 0.60,
then the new portfolio’s risk falls less, from 18 percent to 16.6 percent.

In 1985 Secretary of the Treasury James Baker added what was called structural adjustment to IMF injunctions. Baker believed that the liquidity problems of debtor countries had structural causes. The solution was to shift to export-led growth, reduce the role of the state, and open up the economy to foreign capital. This was not simply a Washington project. The Europeans and IMF bureaucrats were equally enthusiastic and began encouraging developing countries to liberalize capital as well as trade accounts.93 The premise was that low savings and weak financial markets hampered development. Access to funds from abroad would boost investment and growth. After the demise of the Soviet Union, leaders of the developed and developing nations were giddy with expectations that free markets, global connections, and new technology could transform the world.
A crisis in Mexico in 1994 should have been the canary in the coal mine.

When viewed in these terms, the mind-boggling scale and cost of the credit crunch – in total governments worldwide have so far spent $14 trillion on supporting their banking systems – is almost as big a crisis for market fundamentalism and financial capitalism as the collapse of the Soviet Union was for economic planning and communism. What happened between 1989 and 1992 did not just represent the triumph of liberal capitalism; it was claimed as the triumph of the market fundamentalist ideologues who believed that they had engineered it. If communism was the logical conclusion of left thinking, it had collapsed. Some twenty years later the same can be said of market fundamentalism, the logical conclusion of right thinking. The extremes of left and right alike have both been tried – and found wanting.
Both Labour and the Conservatives have thus lost their moral and ideological moorings.

Then, finally, it was moved up once again to 80 per cent in May 1917. There was much evasion, but its general success is indisputable. By 1918–19 it was generating £285 million for the Treasury. This was almost a third of the government’s revenue for that year.21 The ‘excess profits duty’ also showed the single-mindedness with which Britain applied itself to winning the war. The London of 1914 had been the home of Lombard Street, of liberal capitalism, of the upper-class world depicted by writers like P. G. Wodehouse and John Galsworthy. Yet, in a sudden reversal, Britain would tax its capitalists more rigorously than any of the other belligerents.
Despite the considerable demands on British finance, the British government felt confident enough to give loans to foreign governments, to a greater extent than it borrowed from them. Total overseas borrowing by the government during the war amounted to £1,365 million by the end of the financial year 1918–19.

The fact that crisis and revolt can force even reluctant elites to reform has been clear at least since the early critiques of Marx, who thought capitalist societies would collapse in a series of increasingly violent attempts to defend the upper classes. Instead, facing the economic depressions of the late nineteenth and early twentieth centuries, political leaders proved capable of reforming liberal capitalism, deflecting popular revolt with the creation of the welfare state, starting in Germany and Britain. The link between boom times and political complacency is equally well documented, for example, in the cases of modern Japan and Europe, which are often described as too comfortably rich to push tough reform. What is far less well recognized is that even in more normal periods, the circle of life turns, constantly shaping and reshaping economies for the better or worse.

The loudest and most evangelical message of these agencies was that deregulating the financial sector could put the development efforts of lagging countries back on track. States were encouraged to privatise existing banks and license new banks, to take a laissez-faire attitude to international flows of capital and to expand stock markets. The argument of the Washington Consensus was that liberated capital would then itself identify the right investments to spur economic progress.
What actually happened, in 1997, was a financial catastrophe on a scale similar to that which afflicted Latin America after 1982. Financial sector liberalisation in south-east Asia led not to better allocation of capital, but to control of private banks by business entrepreneurs whose interests, because they were not required to manufacture and were not subject to export discipline, were not aligned with those of national development.

Sir Richard Turnbull, the penultimate Governor of Aden, once told Labour politician Denis Healey that ‘when the British Empire finally sank beneath the waves of history, it would leave behind it only two monuments: one was the game of Association Football, the other was the expression “Fuck off”.’ In truth, the imperial legacy has shaped the modern world so profoundly that we almost take it for granted.
Without the spread of British rule around the world, it is hard to believe that the structures of liberal capitalism would have been so successfully established in so many different economies around the world. Those empires that adopted alternative models – the Russian and the Chinese – imposed incalculable misery on their subject peoples. Without the influence of British imperial rule, it is hard to believe that the institutions of parliamentary democracy would have been adopted by the majority of states in the world, as they are today.

The tension between totalitarian utopias and free-market idealism resulted in the destruction of the ancient imperial order, caused the violent death of tens of millions during two world wars and accelerated the development of new technologies – of which computers were perhaps the most important one.
We now live at a time when the aftermath of the Cold War seems like a fading echo of the past. The apparent victory of liberal capitalism over communism, symbolised by the destruction of the Berlin Wall in November 1989, is nowadays doubted and challenged. The Great Recession that was set off in 2007 has demonstrated that unregulated financial markets create financial bubbles that can bring down the entire world economy. Millions of livelihoods have been destroyed in southern Europe, where double-digit unemployment has wiped out hope for the next two generations at least.

The nature of such changes, and their broad effect on Marxism, has been widely debated (Arrighi 2005a, 2005ba; Harvey 2005b; Callinicos 2009), and there is no need to rehearse the arguments in detail here. Our primary interest is in their implications for Marx’s theory of money and credit. The most significant contributions toward revising Marxist theory in light of the changes just mentioned came from Hilferding and Lenin.
In Finance Capital (originally published in 1910, 2007 cited here), Hilferding sought to capture the transition from a competitive and pluralistic “liberal” capitalism toward a monopolistic form of capitalism in which finance had a crucial role. In particular, he focused on the merger, which he saw taking place in Germany, between banking capital and industrial capital. Hilferding suggested that the ultimate outcome of such a merger would be the formation of a general cartel through which capitalist production would be regulated, as by a “single body which could determine the volume of production in all the branches of industry” (Hilferding 2007: 304).

(When she was later asked about her status as Britain’s first female prime minister, she would say that she preferred to be remembered as the first scientist who won the office.)
At Oxford, Thatcher did not make a name for herself as a radical enthusiast of the values that would later be associated with her name. The Toryism of the time was very much under the sway of the period’s progressive mainstream. Just before the 1945 election, Oxford’s student conservatives published a paper declaring that “Liberal Capitalism is as dead as Aristocratic Feudalism,” and welcoming “a state without privilege where each shall enrich himself through the enrichment of all.”16 No one can recall Margaret Roberts taking up a stand that radically differed from this stance. She later claimed to have read Friedrich von Hayek’s Road to Serfdom during her last year at Oxford. If so, it had little visible effect on her public positions.

New Left Review, no. 61 (January/February 2010): 45, http://newleftreview.org/II/61/mike-davis-who-will-build-the-ark: “Tackling the challenge of sustainable urban design for the whole planet, and not just for a few privileged countries or social groups, requires a vast stage for the imagination, such as the arts and sciences inhabited in the May Days of Vkhutemas and the Bauhaus. It presupposes a radical willingness to think beyond the horizon of neo-liberal capitalism toward a global revolution that reintegrates the labour of the informal working classes, as well as the rural poor, in the sustainable reconstruction of their built environments and livelihoods.”
15. Martin Heidegger interview with Der Spiegel by Rudolf Augstein and Georg Wolff, September 23, 1966, published May 31, 1976.
16. Latour's unfortunate and broadly dismissive remarks on geoengineering: Bruno Latour, keynote speech (CAST Symposium: Seeing/Sounding/Sensing, MIT Media Lab, Cambridge, September 26, 2014), https://www.youtube.com/watch?

Finally, the keiretsu bank, through preferential lending, can serve as a price-clearing agent, helping to equalize rates of return for member companies whose profits have been adversely affected by noncompetitive pricing, much like a corporate treasury that compensates divisions for losses on distorted intracompany transfer pricing.
There may be other rationales for intermarket keiretsu. The keiretsu’s brand names, for instance, can be used in new product markets to establish credibility. One very important function that the keiretsu played in the 1960s and 1970s was to block or otherwise control the degree of direct foreign investment in Japan. When the Japanese government agreed to liberalize capital markets in the late 1960s, many Japanese companies feared an influx of foreign, mostly U.S., competition as outside multinationals bought stakes in Japanese businesses. The importance of foreign direct investment to exports has typically been insufficiently appreciated; it is often very difficult for a multinational corporation to market in a foreign country unless it also manufactures its products there.24 As Mark Mason has shown, the level of intra-keiretsu cross-shareholding increased dramatically in anticipation of capital market liberalization, so as to make it more difficult for foreigners to acquire majority ownership of Japanese corporations.25 This tactic proved quite successful: few American multinationals were able to purchase more than minority interests in Japanese companies, even after they were legally permitted to do so.

The report still repeatedly stressed that the role of international agencies was to provide “a mechanism for countries to make external commitments, making it more difficult to back-track on reforms,” including on the international treaties through which states committed themselves to “self-restricting rules, which precisely specify the content of policy and lock it into mechanisms that are costly to reverse.”78 This was what the IMF especially had done, although by the mid 1990s it had also started to take up the governance theme and apply it broadly to the institutional “reform” of states, albeit in terms that hewed closely to the language of neoclassical economics, designed to “enhance market confidence in a context of increasingly liberalized capital accounts.”79 Notably, however, while the G7 countries wanted the IMF to be given a larger surveillance role in ensuring that emerging markets adopted legal and institutional changes to facilitate not only capital flows but also market discipline, little progress was made on the European states’ proposal to amend the IMF articles of agreement so as to prohibit all restrictions on capital mobility.

The middle class, which might have formed the base of that dissent, was wiped out as savings were made worthless. Many Iraqis were driven from towns back to a rural and agricultural life, and the power of feudal landlords increased.
A stated goal of the American occupation was to transform Iraq into a free-market economy. One of the first measures taken by the American occupation was to impose laws that liberalized capital accounts, currency trading, and investment regulations, and lifted price regulations and most state subsidies. An important principle guiding the occupation was not to invest in any state institution that could be privatized in the future, in anticipation of the liquidation of state assets.
Extreme measures such as these radically changed the lives of Iraqis as they struggled with higher inflation and reduced state subsidies while imported consumption goods flooded the market at lower prices.

Now history had caught them in a bind: with the boom they had helped build, ordinary laborers were becoming ever less reliably downtrodden, vulnerable to appeal from the Republicans. The pollster Samuel Lubell was the first to recognize it: “The inner dynamics of the Roosevelt coalition have shifted from those of getting to those of keeping.”
Their liberal champions developed a distaste for them. One of the ways it manifested itself was in matters of style. The liberal capitalism that had created this mass middle class created, in its wake, a mass culture of consumption. And the liberals whose New Deal created this mass middle class were more and more turning their attention to critiquing the degraded mass culture of cheap sensation and plastic gadgets and politicians who seemed to cater to this lowest common denominator—public-relations-driven politicians who catered to only the basest and most sentimental emotions in men.

When the League of Nations condemned Japan for its actions in Manchuria, it stalked out of the League and embarked on its own path—one that would eventually lead to ruin.[3]
The New Order in Asia
Over the next few years, as Tokyo elaborated its claims to a "mission" and "special responsibilities in East Asia," Japanese politics seethed with conspiracies, ideological movements, and secret societies that rejected liberalism, capitalism, and democracy as engines of weakness and decadence. It was thought that there was nothing more noble than to die in battle for the Emperor. Yet some elements in the Japanese military were also, by the mid-1930s, focusing on the more practical question of how to wage modern warfare. Promulgating a doctrine of total war, they sought to establish a "national defense state" in which the industrial and military resources of the country would all be built up and harnessed for that grim eventuality.